GSX Coffee Market Update

Any market or trading views are in no way are to be considered investment advice.

Coffee Market Check-In: August rally, September setup Coffee rallied $1 in August. Certified stocks keep drawing. Differentials stayed firm. Brazil remains the near-term workhorse, but the next 30–45 days of weather will set the tone for 26/27. Tariffs likely linger into mid-’26. August in a nutshell

Price action: Dec’25 NY rallied from ~2.84 to ~3.91 (+≈$1.08). Early squeeze in thin summer markets, then OI expanded as index buying met commercial selling.

Options positioning: Briefly elevated exercise probabilities on Sep $3.00/$2.90 puts left some roasters off-side before the grind higher.

Weather blips: South Minas saw a localized cold snap (leaf burn risk) and earlier hail; chatter of ~0.5m bags shaved from potential 26/27 output.

Crop revisions: Several houses trimmed 25/26 expectations (arabica yields, higher peaberry share).

Stocks & spreads: NY certified stocks fell ~60k bags (mainly Brazils/Mexico; Honduras modest build). Inversions strengthened in both NY and LDN.

Differentials: Milds largely held bid despite the flat-price surge; off-season and tariff-driven substitution supported non-Brazil origins. Brazil fine cups firmed marginally; July/Aug shipments ran at six-year lows for those months.

NY vs BMF: Brazil-linked futures moved almost in lockstep with NY ~96% of the rally underscoring how tightly naturals tracked washed futures in August.

Trees to bags Rule of thumb: ~60–100 trees to produce one 60kg bag, midpoint ~75. With ~7.25–7.5bn trees in Brazil, that implies a theoretical capacity near 100m bags; haircut 15–20% for non-bearing/stumped/pruned trees and you’re still in the ~80–85m ballpark with normal weather and Landcare. It’s a framework, not a forecast, but useful when thinking about medium-term upside after several constrained seasons.What I’m watching next

Tactical: After a +$1 month, a correction wouldn’t surprise. Yet certified remain the cheapest coffee; steady monthly draws (100k+ bags possible) feel plausible if diffs stay premium to “C”.

Physical flow (Sep–Nov): Roasters needing nearby coverage still lean on Brazil.

Economics: Estimated CoP ~R$750/bag (arabica) and ~R$450/bag (Conilon) versus fine-cup Brazil naturals north of R$2,000/bag and Robustas R$1,300–1,500—ample incentive to keep fields well tended.

Supply build-out: Vietnam/Indonesia/Brazil Robustas remain on an expansion path; Vietnam diffs notably weakened in August (e.g., Gr2 +$500 → +$200/mt FOB).

Weather window (next 30–45 days): Forecast heat early September; meaningful rains around the 20–25th would set up a strong flowering. That’s the single biggest lever for 26/27 expectations.

Macro calendar: Seasonally soft Sep/early Oct U.S. equities = potential risk-off backdrop. Brazil political headlines (Supreme Court/Bolsonaro) could sway BRL and local selling.

Tariffs timeline (U.S.): Appeals court curbs broad presidential tariff powers but keeps tariffs in force via stay. Expect them to persist 6–10 months pending Supreme Court steps; if review is granted, final decision likely by June ’26.

Bottom line Near term, structure stays tight as diffs hold premiums and certifies clear; Brazil is pivotal for nearby coverage. Medium term supply for 26/27 will be meaningful if there is enough rain.

Some Charts:

Robusta